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Saturday, November 29, 2008

KING Abdullah of Saudi Arabia said OPEC shouldn't make oil a source of conflict, contradicting Venezuelan President Hugo Chavez who wants the oil exporter group to become an active "political agent".

"Oil is an energy for building and prosperity; it shouldn't become a means of conflict," King Abdullah said at the start of the organisation's heads of state summit in Riyadh on Saturday. "Those who want OPEC to become an organisation of monopoly and exploitation ignore the truth."

Saudi Arabia is the world's largest oil supplier.

The Organisation of Petroleum Exporting Countries, provider of more than 40% of the world's oil, is holding its third heads of state summit since it was founded in 1960.

Saudi Foreign Minister Prince Saud Al-Faisal voiced disagreement with a push by Iran and Venezuela to debate the pricing of oil in currencies other than the US dollar.

"OPEC was born as a geopolitical force and not only as a technical or economic one in the '60s," Mr Chavez said, speaking before King Abdullah. "We should continue to strengthen OPEC, but beyond that, OPEC should set itself up as an active political agent."

The contrasting view on the organisation's role in the world came a day after the disagreement between Venezuelan Oil Minister Rafael Ramirez and the Saudi Foreign Minister over whether to move away from the US dollar was accidentally broadcast on live television.

Mr Chavez said in his speech at the weekend that he was confident OPEC would do what it could to keep oil prices at a "fair" level, adding that if Iran was invaded, prices could easily rise to $US200 a barrel.

Crude oil for December delivery rose $US1.67 to $US95.10 a barrel in New York on Friday.

"The current price of oil, if we take into consideration inflation, is less than what it was in the early 1980s," King Abdullah said. High taxes in consuming nations were hurting consumers more than the producers, he said.

The last OPEC heads of state summit was in 2000 in Venezuela and was hosted by Mr Chavez, who was sworn in as President a year earlier. Iran and Venezuela both have tense political relations with the US.

Ibrahim Ibrahim, an executive at Qatar Petroleum, said that while Venezuela had helped OPEC become a stronger organisation over the years, "there is no need for OPEC to be a political force now. It just has to ensure that the oil market is stable."

Algeria's Oil Minister, Chakib Khelil, said he would urge Russia, the second-biggest oil supplier, to join OPEC when he became president of the organisation.

Russia's membership "would be very good for OPEC", Mr Khelil said in an interview on Saturday during the heads of state summit. Russia attends OPEC meetings as an observer nation.

Mr Khelil will become president on January 1.

Ecuador rejoined OPEC's ranks on Saturday after 15 years out of the organisation, boosting the organisation's clout as record oil prices increase the political and economic influence of its members.